Raspberry Pi shares soar on London debut

The enthusiastic response to the listing of a British tech company at the London Stock Exchange has given rise to hopes that UK markets will be able to recover ground lost against their international competitors.

The shares of Raspberry Pi, the Cambridge-based maker low-cost microcomputers, rose by over a third in its first day of trading as a publicly traded company, after being sold at their highest price range.

The stock rose 105p or 37.2% to 385p by the end of the day, giving it a market cap above £750million.

Arm Holdings (a microchip manufacturer also located in Cambridge) and Lansdowne Partners (a hedge fund) both contributed to the float by committing to purchase £27 million of shares and £16million worth. Retail investors can start trading Raspberry Pi shares starting Friday.

The company is expecting to raise £166 millions from the initial public offering. The company’s employees will receive £68 million as part of an employee incentive plan, which is equivalent to £660,000 per worker.

Eben Upton (46), the 46-year-old chief executive of Raspberry Pi said that UK investors were “of the right calibre and sophistication” for the business. I hope this helps to dispel misconceptions about the UK versus American markets. There is no significant liquidity or valuation gap for all technology companies except the largest.

The advantages of having a home market are greater than any disadvantages.

Arm Holdings, the owner of Paddy Power, dealt a major blow to London when it chose New York for its $55-billion IPO last year. This sparked fears that British companies would flee the city in search of better valuations and a wider investor base. Flutter, owner of Paddy Power, moved its main stock exchange listing to New York. Tui, a German-owned travel company, approved plans to delist in London last February.

Upton stated that the bankers of Raspberry Pi at Jefferies & Peel Hunt were “very good” at finding the correct people to talk to for the nine-month roadshow to investors prior to the float. The company’s previous attempt to go public in 2022, was delayed due to a shortage of microchips.

Upton stated, “We thought we were heard well.” “We thought there were people with the right understanding who could ask the right questions.”

“We have probably had good luck with the people that we’ve spoken to, and we have been raising money in London since several years.” Lansdowne raised money in 2021, and it was our first experience with a firm willing to put in the effort and understand the nuance. The success of technology companies such as Raspberry Pi depends on how well they do their work. If you want to invest, you need to know the details.

Upton founded the Raspberry Pi Foundation in 2008 when he was struggling to convince anyone to study computer sciences in Cambridge. He drew inspiration from the success of BBC Micro and ZX Spectrum computers and created an educational charity to encourage children to become interested in computing. It took four years for the company to create a credit card-sized computer which was affordable enough for children to explore and own. The majority of Raspberry Pi devices are made in Wales, and distributed by Premier Farnell.

Raspberry Pi 5 is the fifth version of its computer. It costs around £59 for 4GB and £79 (8GB). The device works like a regular computer when connected to a keyboard, monitor and mouse. Over 70% of its sales now go to the industrial electronic market. 1,300 companies use Raspberry Pi products in their systems such as security cameras and ventilation systems.

Raspberry Pi announced that it would use all the money it raised to fund engineering projects, improve its supply chain, and other corporate purposes.

Kathleen Brooks said that the listing was “welcomed” by investors. She is a research director for XTB. She said that this was a sign of the London Stock Exchange’s life and that companies could gain value by listing there. It is also a good payday for the founders and directors of the company.

Raspberry Pi was launched in London, despite criticisms that the UK market could not support technology companies.

London’s stock exchange had lost its appeal as investors became more conservative during a time of rising interest rates, and low valuations of British companies. (Helen Cahill writes).

The success of Raspberry Pi could help boost confidence in the flotations market, which has been flagging for some time.

Peel Hunt, the broker said that Raspberry Pi made the decision to list based on specific factors, but that the listing was positive for the overall market and its performance will be “important for a broader market”.

The initial public offering market is expected to be buoyed by a number of factors, including the improved economic outlook in Britain, the increase in mergers and purchases that are driving up the share price, and the strong performance of the companies in the mining, energy and banking sectors. These companies have significant representation in City indexes.

Klarna and the “buy now pay later” credit business, Waterstones the bookshop chain and StarlingBank are all being tipped to be possible IPO candidates, as companies gain more confidence that they can get a good price.

Shein is a Chinese fast fashion company that wants to raise over £1 billion through a London listing. However, fund managers are demanding more information about how the largest ecommerce only fashion retailer in the world makes its products. A political backlash prevented the group from floatating in New York.

Peel Hunt stated: “Despite the outflows of funds and the volume of new opportunities on the market, UK investors will invest in compelling opportunities, provided they are attractive. The UK IPO market may not be open to everyone but we expect it to expand next year. We are seeing more companies preparing early for possible listings in 2025. We expect selective UK IPOs to continue for the rest of 2024.

David Ramm, a lawyer at Crowell & Moring in London, acknowledged that the London Stock Exchange was still facing “fundamental issues”, but said that Raspberry Pi float was “an important piece of positive news during a period which has been largely bad”. Arm Holdings – the chip company – dealt a major blow to London by choosing to list its shares in New York last year.

Ramm stated that it is likely to help the London Stock Exchange deal with low valuations and lack of liquidity, as Raspberry Pi represents an actual UK technology success. Low valuations and low liquidity are driven primarily by a lack in investor excitement and interest. One could argue that if Arm had listed on the London Stock Exchange, it would have created genuine investor excitement which may have led to increased valuations and liquidity. Raspberry Pi can achieve similar results.”